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Palantir (PLTR) shares tumbled further and were seen at trading at a low of $142.34 this morning as investors continued to rotate out of high-beta tech names on concerns of stretched valuations.
PLTR shares are now down more than 20% versus an all-time high they recorded on Aug. 12.
Still, Jefferies’ senior analyst Brent Thill maintains the recent selloff in Palantir stock could prove a drop in the bucket compared to how much further it could crash from current levels.
Palantir Stock Will Fail to Sustain Its Current Valuation
In a CNBC interview this morning, Brent Thill said there’s hardly anything wrong with Palantir’s fundamentals. In fact, it’s “executing better than the majority of the industry.”
According to him, the real issue with PLTR stock remains its price-sales (P/S) ratio of over 140x at writing, since there hasn’t ever been a software name that sustained that multiple over the long term.
That may partially be the reason why insiders have been aggressively unloading Palantir shares in recent months.
According to Barchart, insiders have sold PLTR shares about 19 times over the past three months, while none of them have bought Palantir stock even once during the same period.
PLTR Shares Could Crash Further From Current Levels
On “Squawk on the Street,” the Jefferies analyst also argued that Palantir stock isn’t just expensive here at roughly $150, it will actually remain expensive even if it were to crash sharply from here.
“If you put the most expensive software multiple on Palantir, the stock would be $60,” which still signals potential downside of another 60% from current levels.
In short, the investment firm’s “Underperform” rating on PLTR stock is not based on fundamentals, which Brent Thill agreed remain phenomenal, with no signs of deceleration in the near term.
Instead, it’s all about “sustainability” of the AI stock’s overly stretched multiple, he concluded.
Wall Street Rates Palantir Technologies at ‘Hold’ Only
While not nearly as bearish as Jefferies, other Wall Street firms are against buying Palantir shares at current levels as well.
The consensus rating on PLTR stock currently sits at “Hold” only with the mean target of roughly $155 no longer indicating any meaningful upside from here.
